Why Businesses Need to Use Own Tokens & Cryptocurrency

Aug 06, 2019 at 10:32 // News
Author
Coin Idol
Many Initial Coin Offerings (ICOs) have been questioning whether or not a network needs its own cryptocurrency (token).

It is not ‘unreasonable’ for businesses and networks to develop, promote and use their own tokens and cryptocurrencies. Many Initial Coin Offerings (ICOs) have been questioning whether or not a network needs its own cryptocurrency (token). The networks want to replace Bitcoin, Ethereum, Ripple and other major coins with their own tokens.

With more than 1,500 trade tokens, it is fairly a valid and legitimate query. Tokens that are traded in small quantities, for apps and protocols which are not yet in existence, appear to trade down to cash collected.

There are reasons why networks need to have their own tokens to participate in multitude blockchain applications. So why does a network actually need a token? The veracity is that a token, if it successfully is the foundation to an ecosystem.   

1.       Incentives Work   

For instance, the workcoin telegram group has proved how small rewards can multiply to bring growth and development. If networks could use similar incentives to promote app downloads – refer a peer and be rewarded a free coin, the thing that costs a firm (network) for all intents and purposes zero. There are other coins created by companies to enable the internal payments among employees, or only being used by the users of that particular platform, examples include JPM Coin, a cryptocurrency created by JPMorgan, Facebook Coin, and others.   

2.    Tokens are an abstraction layer, that is advantageous when dealing with nascent technologies   

Without doubt, blockchain and distributed ledger technology (DLT) is still young, and selecting what technology to apply becomes very difficult. As of now, the Bitcoin blockchain has stood a test of time of just one decade. However, Ethereum, Tezos, EOS, Ripple and others have promisingly emerged to compact the voids that Bitcoin has failed to work on in the market.  

Right now, it is still uncertain how best blockchain technology can be changed into a long term thing, but what problems are there to be solved, so this will also be resolve with minute effort. One way to solve this is by networks issuing their own tokens – users of the network find it easy to switch blockchains later, since they don’t have to do anything diverse. It is one way of abstracting the network’s technology decisions away and achieving more flexibility to transform as the distributed ledger technologies (DLTs) develop.  

3.    Tokens help encourage a marketplace   

Tokens make it easy for networks to gain more partnerships. A successful ICO is a clear proof that people love and support your platform, remember, no one wants to associate with a failed project. Therefore, ICO success and a less stock of crypto is a significant mean to incentivize and encourage partners such that they can join your platform.   

4.    Tokens help isolate, insulate and capture network value   

Creating your own cryptocurrency is like buying shares or stock in a venture-backed firm hoping that it will mature and grow much faster than the economy. When your private network develops faster than the entire economy, then cryptocurrency holders will be in position to accumulate more of that value than actually when you used fiat currencies such as dollars, euros, rubles and others.   

5.    Without your own token, it is difficult to give away remunerations   

You can give away Bitcoin or Ether, but that is the same as giving away you own token. But it doesn’t help in differencing your services or products concerning branding.  But if you have your own token, it becomes very for the users to differentiate your product from others. You therefore need your own token. Just know that if you are offering something genuinely and truthfully useful it will possibly work.   

While at the conference in Singapore, the co-founder and director at Blockchain Capital Limited, Gavin Brown, set a question: “Will users trust your newly created coin?” and this is what he had to say: “They will trust it if they trust your brand and if they trust your product.”   

He further expanded his point using the example of Starbucks prepaid cards. Starbucks is a largest coffee and snack provider in the world. Last month, the company was working with Bakkt to allow Bitcoin payments. It plans to install Bakkt’s payment software across all stores to enable customers make payments using crypto.   

How can Companies Experiment with Different Business & Token Models?   

Get a token first: Most ICOs use the Ethereum token standard ERC20 and it is the technical standard which is most used for smart contracts, specifically on the Ether blockchain. ERC20 tokens have basic features and characteristics which are decided at the inception. These characteristics include; name and ticker; total supply; and the decimal places.   

Working and Experimenting with Tokens   

Cons and Pros   

If you create your own token for business, it’s better for you not to do a crowd-sale for the following reasons: a crowd-sale pushes you to start defining what your tokens are – (whether they are security or utility tokens) – and this path costs a lot of money, time and other scarce resources; a crowd-sale needs an expensive marketing campaign to make it valuable and worthwhile, hence the network will end up spending weighty sums of money; and a network can often do one at a later date, after identifying a possible and viable token-model for the network’s business.   

It is better for the network to find out more viable business use-cases and potential applications for your token. For instance: tokens can act as coupons or vouchers for the network’s users (clients); tokens can be given away as a reward for surveys to encourage and incentivize users to take part; and a network can say that token owners are part or members of the club and start getting special discounts – tokens work as ‘member’s-club’.   

Other Companies Creating their Own Tokens   

1. Air Asia   

This company is based in Malaysia, Asia, and is a famous budget airline that is considering whether to enter into the field of cryptocurrency and blockchain. It is planning to create a coin called BigCoin. The coin will be used by customers to pay for air tickets and other goods and services like in-flight meals, seat upgrades, etc.   

2. Mitsubishi UFJ Financial Group (MUFG)   

MUFG is the biggest bank in Japan, Asia and the 5th largest in the world. They want to create MUFG Coin valued at around one Japanese yen (1¥). The bank’s main purposes of the having this coin include: to facilitate transactions on a peer-to-peer (P2P) level; and lower the need for fees and ease the entire payment procedures. MUFG alsom plans to put stablecoin to practical use in this very year.   

3. BitBlox Technologies Inc   

The companies is based in Ontario, and deals in mining as well as developing the future generation of digital currency. It plans to roll out its first proprietary crypto mining facility.   

4. Arias Intel Corp   

This is a tech, media and mobile gaming firm aiming at augmented reality (AR) and virtual reality (VR). The firm plans to create its own coin soon and the crypto will be called iNEO Coin. The users of the coin will also have a digital wallet and (or) iNEO debit card where they can easily spend their crypto.   

5. NetCents Technology Inc   

This is an online payment processing company that manages electronic payments. So far the company is planning to roll out a proprietary crypto platform. NetCents has its individual crypto known as NCCO, and it is working with crypto exchanges to have this coin widely accessible and traded in the market.   

Therefore, the possibility that multinational companies may create, promote and transact in their own digital currencies is not “unreasonable.” Tokenizing your network is more valuable considering the aforementioned reasons, despite the fundamental technical need. What is actually taking place is the democratisation of money.